UPDATE 1-Bangladesh inflation eases, non-food inflation up

Reuters Staff

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DHAKA, April 5 (Reuters) - Bangladesh's annual inflation rate eased to 10.10 percent in March from 10.43 percent in February, but non-food inflation continued to pick-up as the government raised power tariffs to ease its subsidy burden.

Food inflation slowed to 8.28 percent in March from 8.92 percent in February, but non-food inflation accelerated to 13.96 percent from 13.57 percent, the Bureau of Statistics said on Thursday.

The government raised electricity tariffs for the second time since December, an unpopular move in a country where more than a third of the population live on less than $2 a day.

With rising government borrowing from the banking sector and a lack of external aid, the pressure on inflation is expected to continue.

The central bank aims to keep inflation within 7.5 percent in the fiscal year ending in June.

In January, the central bank tightened monetary policy to combat double-digit inflation, and cut its projection for the country's economic growth to around 6.5 percent from 7.0 percent for the current fiscal year.

Inflation in the previous fiscal year that ended last June hit 8.80 percent, exceeding a government target of 8.5 percent on the back of surging food prices.